KOALA CORPORATION
1,200,000 SHARES OF COMMON STOCK/*/
UNDERWRITING AGREEMENT
----------------------
DECEMBER ____, 1998
XXXXXX GULL XXXXXXX & XxXXXXXX INC.
XXXXXX XXXXXXX INCORPORATED
XXXXX-XXXXXX CAPITAL GROUP, INC.
As Representatives of the Several Underwriters
Identified in Schedule II Annexed Hereto
c/o Cleary Gull Xxxxxxx & XxXxxxxx Inc.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
SECTION 1. INTRODUCTORY. Koala Corporation, a Colorado corporation (the
------------
"Company"), and Rockmont Capital Limited (the "Selling Stockholder") propose to
sell a total of 1,200,000 shares (the "Firm Shares") of common stock, $.10 par
value per share (the "Common Stock"), to the several underwriters identified in
Schedule II annexed hereto (the "Underwriters"), who are acting severally and
not jointly. In addition, the Company has agreed to grant to the Underwriters
an option to purchase up to 180,000 additional shares of Common Stock (the
"Optional Shares") as provided in section 6 hereof. The Firm Shares and, to the
extent such option is exercised, the Optional Shares are hereinafter
collectively referred to as the "Shares."
You, as representatives of the Underwriters (the "Representatives"), have
advised the Company and the Selling Stockholder that the Underwriters propose to
make a public offering of their respective portions of the Shares as soon
hereafter as in your judgment is advisable and that the public offering price of
the Shares initially will be $____ per share.
The Company and the Selling Stockholder hereby confirm their respective
agreements with the Underwriters and each other as follows:
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
---------------------------------------------
represents and warrants to, and agrees with, the several Underwriters, and shall
be deemed to
_________________________
/*/ Plus an option to acquire up to 180,000 additional shares of Common Stock
from the Company to cover over-allotments.
represent and warrant to the several Underwriters on each Closing Date (as
hereinafter defined), that:
(a) Each of the Company and the subsidiaries of the Company, all of
which are listed on Exhibit 21 of the Company's most recent Annual Report
on Form 10-KSB (individually, a "Subsidiary" and collectively, the
"Subsidiaries"), has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to own, lease and
operate its properties and to conduct its business as presently conducted
and described in the Prospectus (as hereinafter defined) and the
Registration Statement (as hereinafter defined); each of the Company and
the Subsidiaries is duly registered and qualified to do business as a
foreign corporation under the laws of, and is in good standing as such in,
each jurisdiction in which such registration or qualification is required,
except where the failure to so register or qualify would not have a
material adverse effect on the condition (financial or other), business,
property, net worth, results of operations or prospects of the Company and
the Subsidiaries, taken as a whole ("Material Adverse Effect"); and no
proceeding has been instituted in any such jurisdiction revoking, limiting
or curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification. Complete and correct copies of the certificate
of incorporation, articles of incorporation, or other organizational
documents, as amended or restated (the "Articles of Incorporation") and by-
laws, as amended or restated ("By-laws"), of the Company and each of the
Subsidiaries or the equivalent documents to the Articles of Incorporation
and By-laws for those Subsidiaries which have been formed in jurisdictions
in which Articles of Incorporation and By-laws are not applicable, as in
effect on the date hereof have been delivered to the Representatives, and
no changes thereto will be made on or subsequent to the date hereof and
prior to each Closing Date.
(b) The shares of Common Stock issued and outstanding immediately
prior to the issuance and sale of the Shares hereunder as set forth in the
Prospectus have been duly authorized and validly issued, are fully paid and
nonassessable and conform to the description thereof contained in the
Prospectus and the Registration Statement. There are no preemptive,
preferential or, except as described in the Prospectus, other rights to
subscribe for or purchase any shares of Common Stock (including the
Shares), and no shares of Common Stock have been issued in violation of
such rights. The Shares to be issued and sold to the Underwriters have
been duly authorized and, when issued, delivered and paid for pursuant to
this Agreement, will be validly issued, fully paid and nonassessable and
will conform to the description thereof contained in the Prospectus and the
Registration Statement. The delivery of certificates for the Shares to be
issued and sold hereunder and payment therefor pursuant to the terms of
this Agreement will pass valid title to such Shares to the Underwriters,
free and clear of any lien, claim, encumbrance or defect in title. Except
as described in the Prospectus, there are no outstanding options, warrants
or other rights of any description, contractual or otherwise, entitling any
person to be issued any class of security by the Company or any Subsidiary,
and there are no holders of Common Stock or
2
other securities of the Company or any Subsidiary, or of securities that
are convertible or exchangeable into Common Stock or other securities of
the Company or any Subsidiary, that have rights to the registration of
such Common Stock or securities under the Securities Act of 1933, as
amended, and the regulations thereunder (together, the "Act") or the
securities laws or regulations of any of the states (the "Blue Sky Laws").
(c) Except for the Subsidiaries, the Company has no subsidiaries and
does not own any equity interest in or control, directly or indirectly, any
other corporation, limited liability company, partnership, joint venture,
association, trust or other business organization. The Company owns
directly or indirectly all of the issued and outstanding capital stock of
each Subsidiary, free and clear of any and all liens, claims, encumbrances
or security interests, and all such capital stock has been duly authorized
and validly issued and is fully paid and nonassessable and was issued free
and clear of preemptive or similar rights. There are no outstanding
options, warrants or other rights of any description, contractual or
otherwise, entitling any person to subscribe for or purchase any shares of
capital stock of any Subsidiary.
(d) The Company has full corporate power and authority to enter into
and perform this Agreement, and the execution and delivery by the Company
of this Agreement and the performance by the Company of its obligations
hereunder and the consummation of the transactions described herein, have
been duly authorized with respect to the Company by all necessary corporate
action and will not: (i) violate any provisions of the Articles of
Incorporation or By-laws of the Company or any Subsidiary; (ii) violate any
provisions of, or result in the breach, modification or termination of, or
constitute a default under, any provision of any agreement, lease,
franchise, license, indenture, permit, mortgage, deed of trust, evidence of
indebtedness or other instrument to which the Company or any Subsidiary is
a party or by which the Company or any Subsidiary, or any property owned or
leased by the Company or any Subsidiary, may be bound or affected; (iii)
violate any statute, ordinance, rule or regulation applicable to the
Company or any Subsidiary, or order or decree of any court, regulatory or
governmental body, arbitrator, administrative agency or instrumentality of
the United States or other country or jurisdiction having jurisdiction over
the Company or any Subsidiary; or (iv) result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any Subsidiary. No consent, approval, authorization or other
order of any court, regulatory or governmental body, arbitrator,
administrative agency or instrumentality of the United States or other
country or jurisdiction is required for the execution and delivery of this
Agreement by the Company, the performance of its obligations hereunder or
the consummation of the transactions contemplated hereby, except for
compliance with the Act, the Securities Exchange Act of 1934, as amended,
and the regulations thereunder (together, the "Exchange Act"), the Blue Sky
Laws applicable to the public offering of the Shares by the several
Underwriters and the clearance of such offering and the underwriting
arrangements evidenced hereby with the National Association of Securities
Dealers, Inc. (the "NASD"). This Agreement has been duly authorized,
executed and delivered by and on behalf of the Company and is a valid and
binding agreement of the Company enforceable against the Company in
accordance with its terms.
3
(e) A registration statement on Form SB-2 (Reg. No. 333-61551) with
respect to the Shares, including a preliminary form of prospectus, has been
carefully prepared by the Company in conformity with the requirements of
the Act and has been filed with the Securities and Exchange Commission (the
"Commission"). The conditions for use of Form SB-2, set forth in the
General Instructions thereto, have been satisfied. Such registration
statement, as finally amended and revised at the time such registration
statement was or is declared effective by the Commission (including the
information contained in the form of final prospectus, if any, filed with
the Commission pursuant to Rule 424(b) and Rule 430A under the Act and
deemed to be part of the registration statement if the registration
statement has been declared effective pursuant to Rule 430A(b)) and as
thereafter amended by post-effective amendment, if any, is herein referred
to as the "Registration Statement." The related final prospectus in the
form first filed with the Commission pursuant to Rule 424(b) or, if no such
filing is required, as included in the Registration Statement, or any
supplement thereto, is herein referred to as the "Prospectus." The
prospectus subject to completion in the form included in the Registration
Statement at the time of the initial filing of the Registration Statement
with the Commission, and each such prospectus as amended from time to time
until the date of the Prospectus, is referred to herein as the "Preliminary
Prospectus." Reference made herein to each Preliminary Prospectus or the
Prospectus, as amended or supplemented, shall include all documents and
information incorporated by reference therein under the Exchange Act. Each
Preliminary Prospectus filed as part of the Registration Statement as
originally filed or as part of any amendment thereto, or filed pursuant to
Rule 424 under the Act, complied when so filed in all material repsects
with the Act. The Company has prepared and filed such amendments to the
Registration Statement since its initial filing with the Commission, if
any, as may have been required to the date hereof, and will file such
additional amendments thereto as may hereafter be required. There have
been delivered to the Representatives two signed copies of the Registration
Statement and each amendment thereto, if any, including one copy of any
document filed under the Exchange Act and deemed to be incorporated by
reference into the Registration Statement, together with one copy of each
exhibit filed therewith or incorporated by reference therein, and such
number of conformed copies for each of the Underwriters of the Registration
Statement and each amendment thereto, if any (but without exhibits), and of
each Preliminary Prospectus and of the Prospectus as the Representatives
have requested.
(f) Neither the Commission nor any state securities commission has
issued any order preventing or suspending the use of any Preliminary
Prospectus, nor have any proceedings for that purpose been initiated or
threatened, and each Preliminary Prospectus filed with the Commission as
part of the Registration Statement as originally filed or as part of any
amendment or supplement thereto complied when so filed with the
requirements of the Act and, as of its date, did not include any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. As of the effective date of the Registration Statement, and at
all times subsequent thereto up to each Closing Date, the Registration
Statement and the Prospectus contained or will contain all statements that
are required to be stated therein in accordance with the Act and conformed
or will conform in all respects
4
to the requirements of the Act, and neither the Registration Statement nor
the Prospectus included or will include any untrue statement of a material
fact or omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements, therein not misleading.
Neither the Company, nor to the Company's knowledge, any person that
controls, is controlled by (including the Subsidiaries) or is under common
control with the Company, has distributed or will distribute prior to each
Closing Date any offering material in connection with the offering and sale
of the Shares other than a Preliminary Prospectus, the Prospectus, the
Registration Statement or other materials permitted by the Act and provided
to the Representatives. There has not occurred any material adverse
change, or any development involving a prospective material adverse cahnge,
in the condition, financial or otherwise, or in the earnings, business,
prospects or operations of the Company, from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement).
(g) The documents that are incorporated by reference in each
Preliminary Prospectus, the Prospectus or the Registration Statement or
from which information is so incorporated by reference, when they became
effective or were filed with the Commission, as the case may be, compiled
with the requirements of the Act or the Exchange Act, as applicable, and
when read together with the other information included in such Preliminary
Prospectus, the Prospectus or the Registration Statement, as the case may
be, do not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(h) Each of Ernst & Young LLP, Xxxxxxx Xxxxx Xxxxxxxx & Xxxx, P.A.,
and Xxxxxxxxx Xxxxx & Co., which have expressed their opinions with respect
to the audited consolidated financial statements filed with the Commission
or incorporated by reference and included as a part of each Preliminary
Prospectus, the Prospectus or the Registration Statement are independent
accountants as required by the Act.
(i) The consolidated financial statements and the related notes
thereto included or incorporated by reference in each Preliminary
Prospectus, the Prospectus and the Registration Statement present fairly
the financial position, results of operations and cash flows of the Company
as of their respective dates or for the respective periods covered thereby,
all in conformity with generally accepted accounting principles
consistently applied throughout the periods involved. The financial
statement schedules, if any, included in the Registration Statement present
fairly the information required to be stated therein on a basis consistent
with the consolidated financial statements of the Company contained
therein. The Company had an outstanding capitalization as set forth in the
Registration Statement and under "Capitalization" in the Prospectus as of
the date indicated therein, and there has been no material change thereto
since such date except as disclosed in the Prospectus. The financial and
statistical information and data relating to the Company in each
Preliminary Prospectus, the Prospectus and the Registration Statement are
accurately presented and prepared on a basis consistent with the audited
consolidated financial statements and books and records of the Company. The
5
consolidated financial statements and schedules and the related notes
thereto included or incorporated by reference in each Preliminary
Prospectus, the Prospectus or the Registration Statement are the only such
financial statements and schedules required under the Act to be set forth
therein.
(j) Neither the Company nor any Subsidiary is, nor with the giving of
notice or passage of time or both, would be, in violation or in breach of:
(i) its respective Articles of Incorporation, or By-laws; (ii) any statute,
ordinance, order, rule or regulation applicable to the Company or such
Subsidiary; (iii) any order or decree of any court, regulatory body,
arbitrator, administrative agency or other instrumentality of the United
States or other country or jurisdiction having jurisdiction over the
Company or such Subsidiary; or (iv) any provision of any agreement, lease,
franchise, license, indenture, permit, mortgage, deed of trust, evidence of
indebtedness or other instrument to which the Company or such Subsidiary is
a party or by which any property owned or leased by the Company or such
Subsidiary is bound or affected, except, in the cases of clauses (ii), and
(iv) above, for such violations or breaches that would not have a Material
Adverse Effect. Neither the Company nor any Subsidiary has received notice
of any violation of any applicable statute, ordinance, order, rule or
regulation applicable to the Company or any Subsidiary. The Company and
each Subsidiary have obtained and hold, and are in compliance with, all
permits, certificates, licenses, approvals, registrations, franchises,
consents and authorizations of governmental or regulatory authorities
required under all laws, rules and regulations in connection with their
businesses (hereinafter "permit" or "permits") except where such failure
would not have a Material Adverse Effect, and all of such permits are in
full force and effect; and the Company and each Subsidiary have fulfilled
and performed all of their respective obligations with respect to each such
permit and no event has occurred which would result in, or after notice or
lapse of time would result in, revocation or termination of any such permit
or result in any other impairment of the rights of the holder of such
permit. Neither the Company nor any Subsidiary is or has been (by virtue
of any action, omission to act, contract to which it is a party or other
occurrence) in violation of any applicable foreign, federal, state,
municipal or local statutes, laws, ordinances, rules, regulations or orders
(including those relating to environmental protection, occupational safety
and health and equal employment practices) heretofore or currently in
effect, the violation of which could have a Material Adverse Effect.
(k) There are no legal or governmental proceedings or investigations
pending or threatened to which the Company or any Subsidiary is or may be a
party or to which any property owned or leased by the Company or any
Subsidiary is or may be subject, including, without limitation, any such
proceedings that are related to environmental or employment discrimination
matters, which are required to be described in the Registration Statement
or the Prospectus which are not so described, or which question the
validity of this Agreement or any action taken or to be taken pursuant
hereto. Except as described in the Registration Statement or the
Prospectus, neither the Company nor any Subsidiary: (i) is in violation of
any statute, ordinance, rule or regulation, or any decision, order or
decree of any court, regulatory body, arbitrator, administrative agency
6
or other instrumentality of the United States or other country or
jurisdiction having jurisdiction over the Company or such Subsidiary
relating to the use, disposal or release of hazardous or toxic substances
or relating to the protection or restoration of the environmental or human
exposure to hazardous or toxic substances (collectively, "environmental
laws"); (ii) owns or operates any real property contaminated with any
substance that is subject to any environmental laws; (iii) is liable for
any off-site disposal or contamination pursuant to any environmental laws;
or (iv) is subject to any claim relating to any environmental laws, which
violation, contamination, liability or claim identified in (i) through (iv)
above could have a Material Adverse Effect.
(1) There is no transaction, relationship, obligation, agreement or
other document required to be described in the Registration Statement or
the Prospectus or to be filed or deemed to be filed as an exhibit to the
Registration Statement by the Act, which has not been described or filed as
required. All such contracts or agreements to which the Company or any
Subsidiary is a party have been duly authorized, executed and delivered by
the Company or such Subsidiary, constitute valid and binding agreements of
the Company or such Subsidiary, and are enforceable by and against the
Company or such Subsidiary, in accordance with the respective terms
thereof, subject to bankruptcy, insolvency, and moratorium laws and other
principles of equity.
(m) The Company or a Subsidiary has good and valid title to all
property and assets reflected as owned by the Company or such Subsidiary in
the Company's consolidated financial statements included or incorporated by
reference in the Registration Statement (or the Prospectus), free and clear
of all liens, claims, mortgages, security interests or other encumbrance of
any kind or nature whatsoever except those, if any, reflected in such
financial statements (or elsewhere in the Registration Statement or the
Prospectus). All property (real and personal) held or used by the Company
or a Subsidiary under leases, licenses, franchises or other agreements is
held by the Company or such Subsidiary under valid, subsisting, binding and
enforceable leases, franchises, licenses or other agreements.
(n) Neither the Company nor, to the Company's knowledge, any person
that controls, is controlled by (including the Subsidiaries) or is under
common control with the Company has taken or will take, directly or
indirectly, any action designed to cause or result in, or which
constituted, or which could cause or result in, stabilization or
manipulation, under the Exchange Act or otherwise, of the price of any
security of the Company to facilitate the sale or resale of the Common
Stock.
(o) Except as described in the Registration Statement or the
Prospectus, since the respective dates as of which information is given in
the Registration Statement or the Prospectus and prior to each Closing
Date: (i) neither the Company nor any Subsidiary has or will have incurred
any liability or obligation, direct or contingent, or entered into any
transaction, that is material to the Company, except in the ordinary course
of business; (ii) except for regular quarterly dividends paid in the
ordinary course of business, if any, the Company has not and will not have
paid or declared any dividend or
7
other distribution with respect to its capital stock and neither the
Company nor any Subsidiary is or will be delinquent in the payment of
principal or interest on any outstanding debt obligation; and (iii) there
has not been and will not have been any change in the capital stock, any
material change in the indebtedness of the Company or any Subsidiary, or
any change or development involving or which could be expected to involve,
a Material Adverse Effect, whether or not arising from transactions in the
ordinary course of business.
(p) Neither the Company nor any person that controls, is controlled by
(including the Subsidiaries) or is under common control with the Company
has, directly or indirectly: (i) made any unlawful contribution to any
candidate for political office, or failed to disclose fully any
contribution in violation of law; or (ii) made any payment to any federal,
state or foreign governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof or
applicable foreign jurisdictions.
(q) The Company or a Subsidiary owns or possesses adequate rights to
use all patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service xxxx registrations, copyrights and
licenses presently used in or necessary for the conduct of its business or
ownership of its properties, and neither the Company nor any Subsidiary has
violated or infringed upon the rights of others, or received any notice of
conflict with the asserted rights of others, in respect thereof.
(r) The Company and each Subsidiary are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; neither the Company nor any Subsidiary has been refused any
insurance coverage sought or applied for; and except as described in the
Prospectus neither the Company nor any Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would
not have a material adverse effect on the Company.
(s) No labor dispute with the employees of the Company or any
Subsidiary, which dispute could reasonably be expected to result in a
Material Adverse Effect, exists or, to the knowledge of the Company, is
imminent, and neither the Company nor any Subsidiary, except as disclosed
in the Registration Statement, is a party to any collective bargaining
agreement and, to the knowledge of the Company, no union organizational
attempts are pending. There has been no change in the relationship of the
Company or any Subsidiary with any of its principal suppliers,
manufacturers, contractors or customers resulting in or that could result
in a Material Adverse Effect.
(t) Neither the Company nor any Subsidiary is an "investment company",
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment
8
company", as such terms are defined in the Investment Company Act of 1940,
as amended.
(u) All federal, state and local tax returns required to be filed by
or on behalf of the Company or any Subsidiary have been filed (or are the
subject of valid extension) with the appropriate federal, state and local
authorities, and all such tax returns, as filed, are accurate in all
material respects; all federal, state and local taxes (including estimated
tax payments) required to be shown on all such tax returns or claimed to be
due from or with respect to the business of the Company or such Subsidiary
have been paid or reflected as a liability on the financial statements of
the Company or such Subsidiary for appropriate periods; all deficiencies
asserted as a result of any federal, state or local tax audits have been
paid or finally settled, and no issue has been raised in any such audit
which, by application of the same or similar principles, reasonably could
be expected to result in a proposed deficiency for any other period not so
audited; no state of facts exist or has existed which would constitute
grounds for the assessment of any tax liability with respect to the periods
which have not been audited by appropriate federal, state or local
authorities; there are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any federal, state or local
tax return of any period; and neither the Company nor any Subsidiary has
ever been a member of an affiliated group of corporations filing
consolidated federal income tax returns, other than a group of which the
Company is and has been the common parent.
(v) Except plans listed as Exhibits to the Company's most recent
Annual Report on Form 10-KSB (collectively, the "Plans"), neither the
Company nor any Subsidiary is a participating employer or plan sponsor with
respect to any employee pension benefit plan as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or any employee welfare benefit plan as defined in Section 3(1) of ERISA,
including, without limitation, any multiemployer welfare or pension plan.
With respect to the Plans, the Company is in substantial compliance with
all applicable regulations, including ERISA and the Code. With respect to
each defined benefit retirement plan, such plan does not have benefit
liabilities (as defined in Section 400 l(a)(16) of ERISA) exceeding the
assets of the plan. The Company or the administrator of each of the Plans,
as the case may be, has timely filed the reports required to be filed by
ERISA and the Code in connection with the maintenance of the Plans, and no
facts, including, without limitation, any "reportable event" as defined by
ERISA and the regulations thereunder, exist in connection with the Plans
which, under applicable law, would constitute grounds for the termination
of any of the Plans by the Pension Benefit Guaranty Corporation or for the
appointment by the appropriate United States District Court of a trustee to
administer any of the Plans.
(w) The Company and each Subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of consolidated financial statements in conformity with
generally accepted accounting principles and to maintain
9
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorizations; and (iv)
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(x) None of the Company, any Subsidiary, any officer or director of
the Company or any Subsidiary, or, to the Company's knowledge, any person
who owns, of record or beneficially, any class of securities issued by the
Company is: (i) an officer, director or partner of any brokerage firm,
broker or dealer that is a member of the NASD ("NASD Member"); or (ii)
directly or indirectly, a "person associated with" an NASD member or an
"affiliate", of an NASD member, as such terms are used in the NASD Rules of
the Association.
(y) The Common Stock has been registered pursuant to Section 12(g) of
the Exchange Act. The Company has prepared and filed with the Commission a
registration statement for the Common Stock pursuant to Section 12(g) of
the Exchange Act. Such registration statement either has been declared
effective by the Commission under the Exchange Act or will be declared
effective by the Commission prior to or concurrently with the commencement
of the public offering of the Shares. The Common Stock (including the
Shares) has been approved for designation upon notice of issuance as a
Nasdaq National Market security on The Nasdaq Stock Market ("Nasdaq")
concurrently with the effectiveness of the Registration Statement.
(z) All offers and sales of the securities of the Company and each
Subsidiary prior to the date hereof were made in compliance with the Act
and all other applicable state and federal laws or regulations.
(aa) Except with respect to Shares of Common Stock sold to the Company
in connection with a "cashless exercise" relating to any of the Company's
stock option plans, the Company has obtained for the benefit of the
Underwriters the agreement, enforceable by Xxxxxx Gull Xxxxxxx & XxXxxxxx
Inc. ("Xxxxxx Gull"), of each of the officers and directors of the Company
listed in the Prospectus, and each of the stockholders of the Company who
are listed on Schedule III hereof, who owns of record the number of shares
of Common Stock set forth on Schedule III opposite such stockholder's name,
that for a period of 180 days after the date of the Prospectus, such
persons will not, without the prior written consent of Xxxxxx Gull,
directly or indirectly, offer, sell, transfer, or pledge, contract to sell,
transfer or pledge, or cause or in any way permit to be sold, transferred,
pledged, or otherwise disposed of, any: (i) shares of Common Stock; (ii)
rights to purchase shares of Common Stock (including, without limitation,
shares of Common Stock that may be deemed to be beneficially owned by any
such stockholder in accordance with the applicable regulations of the
Commission and shares of Common Stock that may be issued upon the exercise
of a stock option, warrant or other convertible security); or (iii)
securities that are convertible or exchangeable into shares of Common
Stock.
10
(bb) A copy of the Custody Agreement executed by the Selling
Stockholder and a copy of the Selling Stockholder's Selling Stockholder's
Questionnaire have been furnished to counsel for the Underwriters prior to
the date hereof, along with such other information as such counsel may
reasonably request in connection with their review thereof.
(cc) The Company has complied with all provisions of Section 517.075
of the Florida Statutes, relating to doing business with the government of
Cuba or with any person or affiliate located in Cuba.
A certificate signed by any officer of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby. A certificate delivered by the Company to its counsel for
purposes of enabling such counsel to render the opinion referred to in section
10(d) will also be furnished to the Representatives and counsel for the
Underwriters and shall be deemed to be additional representations and warranties
to the Underwriters by the Company as to the matters covered thereby.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDER. The
---------------------------------------------------------
Selling Stockholder represents and warrants to and agrees with the several
Underwriters and the Company, and shall be deemed to represent and warrant to
the several Underwriters and the Company on each Closing Date, that:
(a) The Selling Stockholder has duly executed a custody agreement
("Custody Agreement") naming _________________ as custodian ("Custodian")
of the Shares of the Selling Stockholder for the purpose of selling such
Shares to the Underwriters on each Closing Date and receiving payment
therefor. This Agreement and the Custody Agreement have been duly
authorized, executed and delivered by the Selling Stockholder.
(b) All consents, approvals, authorizations and orders necessary
for the execution and delivery by the Selling Stockholder of this Agreement
and the Custody Agreement and for the sale and delivery of the Shares to be
sold by the Selling Stockholder hereunder, as set forth on Schedule I
annexed hereto, have been obtained. The Selling Stockholder has, and at the
time of delivery thereof hereunder the Selling Stockholder will have, good
and valid title to the Shares proposed to be sold by the Selling
Stockholder hereunder, free and clear of all voting trust arrangements,
liens, encumbrances, security interests, equities, and claims, other than
any created by the Custody Agreement or this Agreement for the benefit of
the Underwriters. The Selling Stockholder has full right, power and
authority to enter into this Agreement and the Custody Agreement and to
sell, assign, transfer and deliver such Shares hereunder, free and clear of
all voting trust arrangements, liens, encumbrances, security interests,
equities, claims and community or marital property rights, other than any
created by the Custody Agreement or this Agreement for the benefit of the
Underwriters. The Shares to
11
be sold by the Selling Stockholder have been duly authorized and are
validly issued, fully paid and non-assessable and were not issued in
violation of pre-emptive or other similar rights. Upon delivery of and
payment for such Shares hereunder, the Underwriters will acquire good and
valid title thereto, free and clear of all voting trust arrangements,
liens, encumbrances, security interests, equities, claims and community or
marital property rights.
(c) The Selling Stockholder has not distributed and will not
distribute any Preliminary Prospectus, the Prospectus or any other material
in connection with the offering and sale of the Shares. The Selling
Stockholder has not taken and will not take, directly or indirectly, any
action designed to or which could cause or result in, under the Exchange
Act or otherwise, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Common
Stock.
(d) The execution, delivery and performance by the Selling Stockholder
of this Agreement and the Custody Agreement will not, if applicable, result
in the violation of any provisions of the Articles of Incorporation, By-
laws or other governing documents of the Selling Stockholder, or constitute
a breach, or be in contravention, of any provision of any agreement,
franchise, license, indenture, mortgage, deed of trust or other instrument
to which the Selling Stockholder is a party or by which the Selling
Stockholder or the Selling Stockholder's property may be bound or affected,
or any statute, rule or regulation applicable to the Selling Stockholder,
or violate any order or decree of any court, regulatory body,
administrative agency or other governmental body having jurisdiction over
the Selling Stockholder or any of the Selling Stockholder's property. No
consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body is required for the
execution and delivery of, and performance under, this Agreement by the
Selling Stockholder or the consummation by the Selling Stockholder of the
transactions contemplated by this Agreement, except for compliance with the
Act, the Exchange Act, the Blue Sky Laws applicable to the public offering
of the Shares by the Underwriters and the clearance of such offering with
the NASD. The Selling Stockholder hereby represents and warrants that the
Custody Agreement has been duly executed and delivered by or on behalf of
the Selling Stockholder to the Representatives.
(e) This Agreement and the Custody Agreement are each valid and
binding agreements of the Selling Stockholder enforceable in accordance
with their respective terms, subject to bankruptcy, insolvency, and
moratorium laws and other principles of equity.
(f) The Selling Stockholder has deposited in custody, under the
Custody Agreement, certificates in negotiable form for the Shares to be
sold hereunder by the Selling Stockholder as set forth opposite the Selling
Stockholder's name on Schedule I annexed hereto (including the maximum
number of Optional Shares set forth on Schedule 1) for the purpose of
further delivery pursuant to this Agreement. The Selling Stockholder
agrees that the Shares of the Selling Stockholder on deposit with the
12
Custodian are subject to the interests of the Company and the Underwriters,
that the arrangements made for such custody, pursuant to the Custody
Agreement, are to that extent irrevocable, and that the obligations of the
Selling Stockholder hereunder and under the Custody Agreement shall not be
terminated, except as provided in this Agreement and the Custody Agreement,
by any act of the Selling Stockholder, by operation of law, by the death or
incapacity of the Selling Stockholder or, by the occurrence of any other
event. If any Selling Stockholder should die or become incapacitated, or
if any other event should occur before the delivery of the Shares
hereunder, the certificates for Shares then on deposit with the Custodian
shall, to the extent such Shares are purchased by the Underwriters, be
delivered by the Custodian in accordance with the terms and conditions of
this Agreement and the Custody Agreement as if such death, incapacity, or
other event had not occurred, regardless of whether or not the Custodian
shall have received notice thereof. The Selling Stockholder represents that
the Custodian has been authorized to receive and acknowledge receipt of the
proceeds of sale of the Shares sold by the Selling Stockholder against
delivery thereof and otherwise to act on behalf of the Selling Stockholder.
(g) Insofar as it relates to the Selling Stockholder, each Preliminary
Prospectus, as of its date, has conformed in all material respects with the
requirements of the Act and, as of its date, has not included any untrue
statement of a material fact or omitted to state a material fact necessary
to, make the statements therein not misleading; and on the effective date
of the Registration Statement and at all times subsequent thereto up to
each Closing Date, (i) the Registration Statement and the Prospectus, as
they relate to the Selling Stockholder, did or will conform to the
requirements of the Act, and (ii) neither the Registration Statement nor
the Prospectus as it relates to the Selling Stockholder did or will include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading.
(h) To the knowledge of the Selling Stockholder, the representations
and warranties of the Company set forth in section 2 hereof are true and
correct.
(i) The information contained in the Selling Stockholder's Selling
Stockholders' Questionnaire completed in connection with the Company's
public offering and delivered to the Representatives was, as of the date of
such questionnaire, and is, as of the date of this Agreement, true and
correct.
A certificate signed by or on behalf of the Selling Stockholder as such and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed a representation and warranty by the Selling Stockholder to the
Underwriters as to the matters covered thereby. A certificate delivered by or
on behalf of the Selling Stockholder to counsel for the Selling Stockholder for
purposes of enabling such counsel to render the opinion referred in Section
10(e) will also be furnished to the Representatives and counsel for the
Underwriters and shall be deemed to be additional representations and warranties
to the Underwriters by the Selling Stockholder as to the matters covered
thereby.
13
SECTION 4. REPRESENTATION OF UNDERWRITERS. The Representatives will act
------------------------------
as the representatives for the several Underwriters in connection with the
public offering of the Shares, and any action under or in respect of this
Agreement taken by the Representatives will be binding upon all of the
Underwriters.
SECTION 5. INFORMATION FURNISHED BY THE UNDERWRITERS. The information set
-----------------------------------------
forth in the last paragraph on the outside front cover page of the Prospectus
concerning the terms of the offering by the Underwriters, and the concession and
reallowance amounts appearing under the caption "Underwriting" in the Prospectus
constitute all of the information furnished to the Company by and on behalf of
the Underwriters for use in connection with the preparation of the Registration
Statement and the Prospectus, as such information is referred to in this
Agreement.
SECTION 6. PURCHASE, SALE AND DELIVERY OF SHARES.
-------------------------------------
(a) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions herein set forth,
the Company agrees to sell to the Underwriters identified in Schedule II
annexed hereto 320,000 Firm Shares, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company the number of Firm
Shares as hereinafter set forth at the price per share of $_____. The
obligation of each Underwriter to the Company shall be to purchase from the
Company that number of full Firm Shares which (as nearly as practicable in
full shares as determined by the Representatives) bears the same proportion
to the number of Firm Shares to be sold by the Company as the number of
shares set forth opposite the name of such Underwriter in Schedule II
annexed hereto bears to the total number of Firm Shares to be purchased by
all of the Underwriters under this Agreement.
(b) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions herein set forth,
the Selling Stockholder agrees, to sell to the Underwriters that number of
full Firm Shares set forth opposite the name of the Selling Stockholder in
Schedule I annexed hereto (a total of 880,000 shares), and each of the
Underwriters agrees, severally and not jointly, to purchase from the
Selling Stockholder the number of Firm Shares as hereinafter set forth at
the same purchase price per share as stated in the preceding paragraph.
The obligation of each Underwriter to the Selling Stockholder shall be to
purchase from the Selling Stockholder that number of full Firm Shares which
(as nearly as practicable in full shares as determined by the
Representatives) bears the same proportion to the number of Firm Shares to
be sold by the Selling Stockholder as the number of shares set forth
opposite the name of such Underwriter in Schedule II annexed hereto bears
to the total number of Firm Shares to be purchased by all of the
Underwriters under this Agreement.
(c) On the First Closing Date (as hereinafter defined), the Company
and the Custodian on behalf of the Selling Stockholder will deliver to the
Representatives, at the offices of Xxxxxx Gull Xxxxxxx & XxXxxxxx Inc., 000
Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, or through the facilities of
The Depository Trust Company, for the accounts of the several Underwriters,
certificates representing the Firm Shares to be
14
sold by them against payment of the purchase price therefor by wire
transfer of immediately available funds to the accounts specified by the
Company and the Selling Stockholder. As referred to in this Agreement, the
"First Closing Date" shall be on the third full business day after the date
of the Prospectus, at 9:00 a.m., Milwaukee, Wisconsin time, or at such
other date or time not later than ten full business days after the date of
the Prospectus as the Representatives, the Company and the Selling
Stockholder may agree. The certificates for the Firm Shares to be so
delivered will be in denominations and registered in such names as the
Representatives request by notice to the Company and the Selling
Stockholder, or either of them, prior to the First Closing Date, and such
certificates will be made available for checking and packaging at 9:00
a.m., Milwaukee, Wisconsin time on the first full business day preceding
the First Closing Date at a location to be designated by the
Representatives.
(d) In addition, on the basis of the representations, warranties and
agreements herein contained, and subject to the terms and conditions herein
set forth, the Company hereby agrees to sell to the Underwriters, and the
Underwriters, severally and not jointly, shall have the right at any time
within forty-five days after the date of the Prospectus to purchase up to
180,000 Optional Shares from the Company at the same purchase price per
share to be paid for the Firm Shares, for use solely in covering any over-
allotments made by the Underwriters in the sale and distribution of the
Firm Shares. The option granted hereunder may be exercised in full or in
part upon notice by the Representatives to the Company and the Selling
Stockholder, or either of them, within forty-five days after the date of
the Prospectus setting forth the aggregate number of Optional Shares to be
purchased by the Underwriters and sold by the Company, the names and
denominations in which the certificates for such shares are to be
registered and the date and place at which such certificates will be
delivered. Such date of delivery (the "Second Closing Date") shall be
determined by the Representatives, provided that the Second Closing Date,
which may be the same as the First Closing Date, shall not be earlier than
the First Closing Date and, if after the First Closing Date, shall not be
earlier than three nor later than ten full business days after delivery of
such notice to exercise. Certificates for the Optional Shares will be made
available for checking and packaging at 9:00 a.m., Milwaukee, Wisconsin
time, on the first full business day preceding the Second Closing Date at a
location to be designated by the Representatives. The manner of payment
for and delivery of (including the denominations of and the names in which
certificates are to be registered) the Optional Shares shall be the same as
for the Firm Shares.
(e) The Representatives have advised the Company and the Selling
Stockholder that each Underwriter has authorized the Representatives to
accept delivery of the Shares and to make payment therefor. It is
understood that the Representatives, individually and not as
representatives of the Underwriters, may (but shall not be obligated to)
make payment for any Shares to be purchased by any Underwriter whose funds
shall not have been received by the Representatives by the First Closing
Date or the Second Closing Date, as the case may be, for the account of
such Underwriter, but any such payment shall not relieve such Underwriter
from any obligation under this
15
Agreement. As referred to in this Agreement, "Closing Date" shall mean
either the First Closing Date or the Second Closing Date.
SECTION 7. COVENANTS OF THE COMPANY. The Company covenants and agrees
------------------------
with the several Underwriters that:
(a) If the effective time of the Registration Statement is not
prior to the execution and delivery of this Agreement, the Company will use
its best efforts to cause the Registration Statement to become effective at
the earliest possible time and, upon notification from the Commission that
the Registration Statement has become effective, will so advise the
Representatives and counsel to the Underwriters promptly. If the effective
time of the Registration Statement is prior to the execution and delivery
of this Agreement and any information shall have been omitted therefrom in
reliance upon Rule 430A, the Company, at the earliest possible time, will
furnish the Representatives with a copy of the Prospectus to be filed by
the Company with the Commission to comply with Rule 424(b) and Rule 430A
under the Act and, if the Representatives do not object to the contents
thereof, will comply with such Rules. Upon compliance with such Rules, the
Company will so advise the Representatives promptly. The Company will
advise the Representatives and counsel to the Underwriters and the Selling
Stockholder promptly of the issuance by the Commission or any state
securities commission of any stop order suspending the effectiveness of the
Registration Statement or of the institution of any proceedings for that
purpose, or of any notification of the suspension of qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceedings for that purpose, and will also advise the Representatives and
counsel to the Underwriters and the Selling Stockholder promptly of any
request of the Commission for amendment or supplement of the Registration
Statement, of any Preliminary Prospectus or of the Prospectus, or for
additional information, and the Company will not file any amendment or
supplement to the Registration Statement (either before or after it becomes
effective), to any Preliminary Prospectus or to the Prospectus (including a
prospectus filed pursuant to Rule 424(b)), or file any document under the
Exchange Act in the time period from the execution of this Agreement
through the First Closing Date with respect to the Firm Shares, or from the
time of notice by the Representatives exercising the option to purchase the
Optional Shares through the Second Closing Date with respect to the
Optional Shares, without first providing the Underwriters with a copy prior
to such filing (with a reasonable opportunity to review such amendment or
supplement) or if the Representatives object to such filing.
(b) If, at any time when a prospectus relating to the Shares is
required by law to be delivered in connection with sales by an Underwriter
or dealer, any event occurs as a result of which the Prospectus would
include an untrue statement of a material fact, or would omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to supplement the
Prospectus to comply with the Act, the Company promptly will advise the
Representatives and counsel to the Underwriters and the Selling Stockholder
thereof and will promptly prepare and file with
16
the Commission, at its expense, an amendment to the Registration Statement
which will correct such statement or omission or an amendment which will
effect such compliance; and, if any Underwriter is required to deliver a
prospectus after the effective date of the Registration Statement, the
Company, upon request of the Representatives, will prepare promptly such
prospectus or prospectuses as may be necessary to permit compliance with
the requirements of Section 10(a)(3) of the Act. The Company consents to
the use, in accordance with the provisions of the Act and with the Blue Sky
Laws of the jurisdictions in which the Shares are offered by the several
Underwriters and by dealers, of each Preliminary Prospectus.
(c) Neither the Company nor any Subsidiary will, prior to the Second
Closing Date, if any, incur any liability or obligation, direct or
contingent, or enter into any material transaction, other than in the
ordinary course of business, or enter into any transaction with an
"affiliate," as defined in Rule 405 under the Act, which is required to be
described in the Prospectus pursuant to Item 404 of Regulation S-K under
the Act, except as described in the Prospectus.
(d) Except with respect to Shares of Common Stock acquired in
connection with a "cashless exercise" relating to any of the Company's
stock option plans, neither the Company nor any Subsidiary will, prior to
the Second Closing Date, if any, acquire any of the Common Stock nor,
except for the Company's regular quarterly dividend paid in the ordinary
course of business, if any, will the Company declare or pay any dividend or
make any other distribution upon its Common Stock payable to stockholders
of record on a date prior to such earlier date, except as described in the
Prospectus.
(e) The Company will make generally available to its security holders
and the Representatives an earnings statement as soon as practicable, but
in no event later than sixty days after the end of its fiscal quarter in
which the first anniversary of the effective date of the Registration
Statement occurs, covering a period of twelve consecutive calendar months
beginning after the effective date of the Registration Statement, which
will satisfy the provisions of the last paragraph of Section 11(a) of the
Act and Rule 158 promulgated thereunder.
(f) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the Company
will furnish to the Representatives, at the expense of the Company, copies
of the Registration Statement, the Prospectus, any Preliminary Prospectus
and all amendments and supplements to any such documents, including any
document filed under the Exchange Act and deemed to be incorporated by
reference in the Registration Statement, in each case as soon as available
and in such quantities as the Representatives may reasonably request.
(g) The Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder for the purposes set forth in the
Prospectus.
(h) The Company will cooperate with the Representatives and counsel to
the Underwriters in qualifying or registering the Shares for sale under the
Blue Sky Laws of
17
such jurisdictions as the Representatives designates, and will continue
such qualifications or registrations in effect so long as reasonably
requested by the Representatives to effect the distribution of the Shares.
The Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any such jurisdiction where
it is not presently qualified. In each jurisdiction where any of the Shares
shall have been qualified as provided above, the Company will file such
reports and statements as may be required to continue such qualification
for a period of not less than one year from the date of the Prospectus. The
Company shall promptly prepare and file with the Commission, from time to
time, such reports as may be required to be filed by the Act and the
Exchange Act, and the Company shall comply in all respects with the
undertakings given by the Company in connection with the qualification or
registration of the Shares for offering and sale under the Blue Sky Laws.
(i) During the period of three years from the date of the Prospectus,
the Company will furnish to each of the Representatives and to each of the
other Underwriters who may so request, as soon as available, each report,
statement or other document of the Company or its Board of Directors mailed
to its stockholders or filed with the Commission, and such other
information concerning the Company as the Representatives may reasonably
request.
(j) The Company shall deliver the requisite notice of issuance to
Nasdaq and shall take all necessary or appropriate action within its power
to maintain the authorization for trading of the Common Stock as a Nasdaq
National Market security, or take such action to authorize the Common Stock
for listing on the New York Stock Exchange or the American Stock Exchange,
for a period of at least thirty-six months after the date of the
Prospectus.
(k) Except for (i) the issuance and sale by the Company of Common
Stock upon exercise of presently existing outstanding stock options, and
(ii) the sale of the Shares to be sold by the Company pursuant to this
Agreement, the Company shall not, for a period of 180 days after the date
of the Prospectus, without the prior written consent of Xxxxxx Gull,
directly or indirectly, offer, sell or otherwise dispose of, contract to
sell or otherwise dispose of, or cause or in any way permit to be sold or
otherwise disposed of, any: (i) shares of Common Stock; (ii) rights to
purchase shares of Common Stock; or (iii) securities that are convertible
or exchangeable into shares of Common Stock.
(l) The Company will maintain a transfer agent and, if required by law
or the rules of The Nasdaq Stock Market or any national securities exchange
on which the Common Stock is listed, a registrar (which, if permitted by
applicable laws and rules, may be the same entity as the transfer agent)
for its Common Stock. The Company shall, as soon as practicable after the
date hereof, use its best efforts to obtain listing in Standard and Poor's
Stock Guide, or such other recognized securities manuals for which it may
qualify for listing, and the Company shall use its best efforts to maintain
such listings for at least five years after the First Closing Date.
18
(m) If at any time when a prospectus relating to the Shares is
required to be delivered under the Act, any rumor, publication or event
relating to of affecting the Company shall occur as a result of which, in
the opinion of Xxxxxx Gull, the market price of the Common Stock has been
or is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to the Prospectus), the
Company will, after written notice from Xxxxxx Gull advising the Company of
any of the matters set forth above, promptly consult with Xxxxxx Gull
concerning the advisability and substance of, and, if the Company and
Xxxxxx Gull jointly determine that it is appropriate, disseminate, a press
release or other public statement responding to or commenting on, such
rumor, publication or event.
(n) The Company will comply or cause to be complied with the
conditions to the obligations of the Underwriters in section 10 hereof.
SECTION 8. COVENANTS OF THE SELLING STOCKHOLDER. The Selling Stockholder
------------------------------------
covenants and agrees with the several Underwriters and the Company as follows:
(a) If the effective time of the Registration Statement is not
prior to the execution and delivery of this Agreement, the Selling
Stockholder will cooperate to the extent necessary to cause the
Registration Statement to become effective at the earliest possible time;
and the Selling Stockholder will do and perform all things to be done and
performed by the Selling Stockholder prior to each Closing Date, pursuant
to this Agreement or the Custody Agreement.
(b) The Selling Stockholder agrees to deliver to the Custodian on
or prior to the First Closing Date a properly completed and executed United
States Treasury Department Form W-9 (or other applicable substitute form or
statement specified by Treasury Department regulations in lieu thereof).
(c) The Selling Stockholder will pay all federal and other taxes,
if any, on the transfer or sale of the Shares being sold by the Selling
Stockholder to the Underwriters.
(d) For a period of 180 days after the date of the Prospectus, the
Selling Stockholder will not, without the prior written consent of Xxxxxx
Gull, directly or indirectly, offer, sell, transfer, or pledge, contract to
sell, transfer or pledge or cause or in any way permit to be sold,
transferred, pledged or otherwise disposed of any: (i) shares of Common
Stock; (ii) rights to purchase shares of Common Stock (including, without
limitation, shares of Common Stock that may be deemed to be beneficially
owned by the Selling Stockholder in accordance with the rules and
regulations of the Commission and shares of Common Stock that may be issued
upon exercise of a stock option, warrant or other convertible security); or
(iii) securities that are convertible or exchangeable into shares of Common
Stock.
(e) The Selling Stockholder will furnish any documents, instruments
or other information which the Representatives may reasonably request in
connection with the sale and transfer of the Shares to the Underwriters.
19
SECTION 9. PAYMENT OF EXPENSES. Whether or not the transactions
-------------------
contemplated hereunder are consummated or this Agreement becomes effective, or
if this Agreement is terminated for any reason, the Company will pay the costs,
fees and expenses incurred in connection with the public offering of the Shares.
Such costs, fees and expenses to be paid by the Company will include, without
limitation:
(a) All costs, fees and expenses (excluding the expenses incurred
by the Underwriters and the legal fees and disbursements of counsel for the
Underwriters, but including such fees and disbursements described in
subsection (b) of this section 9) incurred in connection with the
performance of the Company's obligations hereunder, including without
limiting the generality of the foregoing: the registration fees related to
the filing of the Registration Statement with the Commission; the fees and
expenses related to the quotation of the Shares on Nasdaq or other national
securities exchange; the fees and expenses of the Company's counsel,
accountants, transfer agent and registrar; the costs and expenses incurred
in connection with the preparation, printing, shipping, and delivery of the
Registration Statement, each Preliminary Prospectus and the Prospectus
(including all exhibits and financial statements) and all agreements and
supplements provided for herein, this Agreement and the Custody Agreement,
including, without limitation, shipping expenses via overnight delivery
and/or courier service to comply with applicable prospectus delivery
requirements; and the costs and expenses associated with the production of
materials related to, and travel expenses incurred by the management of the
Company in connection with, the various meetings to be held between the
Company's management and prospective investors.
(b) All registration fees and expenses, including legal fees and
disbursements of counsel for the Underwriters incurred in connection with
qualifying or registering all or any part of the Shares for offer and sale
under the Blue Sky Laws and the clearing of the public offering and the
underwriting arrangements evidenced hereby with the NASD.
(c) All fees and expenses related to printing of the certificates
for the Shares, and all transfer taxes, if any, with respect to the sale
and delivery of the Shares to the Underwriters. Notwithstanding the
foregoing, the Selling Stockholder shall be solely responsible for any
transfer or sales tax imposed upon the transfer and sale of the Selling
Stockholder's Shares to the Underwriters and for the Selling Stockholder's
respective pro rata share of all fees and expenses of the Custodian. All
costs and expenses incident to the performance of the Selling Stockholder's
obligations hereunder which are not otherwise specifically provided for in
this section will be borne and paid solely by the Selling Stockholder. In
the event the Selling Stockholder shall fail to pay the Selling
Stockholder's pro rata share of the costs, fees and expenses described in
this section within five days after demand by the Representatives therefor,
the Company shall be obligated to pay such costs, fees and expenses on
demand.
SECTION 10. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
-------------------------------------------------
obligations of the several Underwriters under this Agreement shall be subject to
the accuracy of the representations and warranties on the part of the Company
and the Selling Stockholder herein set
20
forth as of the date hereof and as of each Closing Date, to the accuracy of the
statements of the Company's officers and the Selling Stockholder made pursuant
to the provisions hereof, to the performance by the Company and the Selling
Stockholder of their respective obligations hereunder, and to the following
additional conditions, unless waived in writing by the Representatives:
(a) The Registration Statement shall have been declared effective by
the Commission not later than 5:30 p.m., Washington, D.C. time, prior to
the date on the date of this Agreement, or such later time as shall have
been consented to by the Representatives, which consent shall be deemed to
have been given if the Registration Statement shall have been declared
effective on or before the date and time requested in the acceleration
request submitted on behalf of the Representatives pursuant to Rule 461
under the Act; all filings required by Rules 424(b) and 430A under the Act
shall have been timely made; no stop order suspending the effectiveness of
the Registration Statement shall have been issued by the Commission or any
state securities commission nor, to the knowledge of the Company, shall any
proceedings for that purpose have been initiated or threatened; and any
request of the Commission or any state securities commission for inclusion
of additional information in the Registration Statement, or otherwise,
shall have been complied with to the satisfaction of the Representatives.
(b) Since the dates as of which information is given in the
Registration Statement:
(i) there shall not have occurred any change or development
involving, or which could be expected to involve, a Material Adverse
Effect, whether or not arising from transactions in the ordinary
course of business; and
(ii) the Company shall not have sustained any loss or
interference from any labor dispute, strike, fire, flood, windstorm,
accident or other calamity (whether or not insured) or from any court
or governmental action, order or decree,
the effect of which on the Company, in any such case described in clause
(i) or (ii) above, is in the opinion of the Representatives so material and
adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares on the terms and in the
manner contemplated in the Registration Statement and the Prospectus.
(c) The Representatives shall not have advised the Company that the
Registration Statement or the Prospectus contains an untrue statement of
fact that, in the opinion of the Representatives or counsel for the
Underwriters, is material, or omits to state a fact that, in the opinion of
the Representatives or such counsel, is material and is required to be
stated therein or necessary to make the statements therein not misleading.
(d) The Representatives shall have received an opinion of Xxxxx,
Johnson, Robinson, Xxxx & Ragonetti, P.C., counsel for the Company,
addressed to the
21
Representatives, as the representatives of the Underwriters, and dated the
First Closing Date or the Second Closing Date, as the case may be, to the
effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority
to own, lease and operate its properties and conduct its business as
presently conducted and as described in the Prospectus and the
Registration Statement; the Company is duly registered and qualified
to do business as a foreign corporation under the laws of, and is in
good standing as such in, each jurisdiction in which such registration
or qualification is required, except where the failure to so register
or qualify would not have a Material Adverse Effect;
(ii) The authorized capital stock of the Company consists of
10,000,000 shares of Common Stock, par value $0.10 per share, and
1,000,000 shares of Preferred Stock, and all such stock conforms as to
legal matters to the descriptions thereof in the Prospectus and the
Registration Statement;
(iii) The issued and outstanding shares of capital stock of the
Company immediately prior to the issuance and sale of the Shares to be
sold by the Company hereunder have been duly authorized and validly
issued, are fully paid and nonassessable, and there are no preemptive,
preferential or other rights to subscribe for or purchase any shares
of capital stock of the Company, and no shares of capital stock of the
Company have been issued in violation of such rights;
(iv) To such counsel's knowledge, except for the Subsidiaries,
the Company has no subsidiaries, and the Company does not own any
equity interest in or control, directly or indirectly, any other
corporation, limited liability company, partnership, joint venture,
association, trust or other business organization except as described
in the Prospectus, the Registration Statement and Schedule 2(c)
hereto; each Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority
to own, lease and operate its properties and to conduct its business
as presently conducted and as described in the Prospectus and the
Registration Statement; each Subsidiary is duly registered or
qualified to do business as a foreign corporation under the laws of,
and is in good standing as such in, each jurisdiction in which such
registration or qualification is required, except where the failure to
so register or qualify would not have a Material Adverse Effect; the
issued and outstanding shares of the capital stock of each Subsidiary
have been duly authorized and validly issued, are fully paid and
nonassessable and there are no preemptive, preferential or other
rights to subscribe for or purchase any shares of capital stock of any
Subsidiary, and no shares of capital stock of any Subsidiary have been
issued in violation of such rights; the Company owns directly and
beneficially all of the issued and
22
outstanding capital stock of each Subsidiary, free and clear of any
and all liens, claims, encumbrances and security interests;
(v) The certificates for the Shares to be delivered hereunder
are in due and proper form and conform to the requirements of
applicable law; and when duly countersigned by the Company's transfer
agent, and delivered to the Representatives or upon the order of the
Representatives against payment of the agreed consideration therefor
in accordance with the provisions of this Agreement, the Shares to be
sold by the Company represented thereby will be duly authorized and
validly issued, fully paid and nonassessable, and free of any
preemptive, preferential or other rights to subscribe for or purchase
shares of Common Stock;
(vi) The Registration Statement has become effective under the
Act, and to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been initiated or are threatened
under the Act or any Blue Sky Laws; the Registration Statement and the
Prospectus and any amendment or supplement thereto, including any
document incorporated by reference in the Registration Statement,
(except for the financial statements and other statistical or
financial data included therein as to which such counsel need express
no opinion) comply as to form in all material respects with the
requirements of the Act; the conditions for use of Form SB-2, set
forth in the General Instructions thereto, have been satisfied; no
facts have come to the attention of such counsel which lead it to
believe that either the Registration Statement or the Prospectus or
any amendment or supplement thereto, including any document
incorporated by reference in the Registration Statement, contains any
untrue statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, as of the
First Closing Date or the Second Closing Date, as the case may be,
contained any untrue statement of a material fact or omitted or will
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances under which they were made (except for the financial
statements and other financial data included therein as to which such
counsel need express no opinion); to such counsel's knowledge, there
are no legal or governmental proceedings pending or threatened,
including, without limitation, any such proceedings that are related
to environmental or employment discrimination matters, required to be
described in the Registration Statement or the Prospectus which are
not so described or which question the validity of this Agreement or
any action taken or to be taken pursuant thereto, nor is there any
transaction, relationship, agreement, contract or other document of a
character required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to or incorporated by
reference in the Registration Statement by the Act, which is not
described, filed or incorporated by reference as required;
23
(vii) The Company has full corporate power and authority to
enter into and perform this Agreement; the performance of the
Company's obligations hereunder and the consummation of the
transactions described herein have been duly authorized by the Company
by all necessary corporate action and this Agreement has been duly
executed and delivered by and on behalf of the Company, and is a
legal, valid and binding agreement of the Company enforceable against
the Company in accordance with its terms, except that rights to
indemnity or contribution may be limited by applicable law and except
as enforceability of this Agreement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, and by equitable principles limiting the
right to specific performance or other equitable relief; no consent,
approval, authorization or other order or decree of any court,
regulatory or governmental body, arbitrator, administrative agency or
other instrumentality of the United States or other country or
jurisdiction having jurisdiction over the Company is required for the
execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement (except for compliance
with the Act, the Exchange Act, applicable Blue Sky Laws and the
clearance of the underwriting arrangements by the NASD);
(viii) The execution, delivery and performance of this Agreement
by the Company will not: (A) violate any provisions of the Articles of
Incorporation or By-laws of the Company or any Subsidiary; (B) or
result in the breach, modification or termination of, or constitute a
default under, any agreement, lease, franchise, license, indenture,
permit, mortgage, deed of trust, other evidence of indebtedness or
other instrument to which the Company or any Subsidiary is a party or
by which the Company or such Subsidiary, or any of their respective
owned or leased property is bound, and which is filed or incorporated
by reference as an exhibit to the Registration Statement; or (C)
violate any statute, ordinance, rule, or regulation of any regulatory
or governmental body, or to such counsel's knowledge, any order or
decree of any court, arbitrator, administrative agency or other
instrumentality of the United States or other country or jurisdiction
having jurisdiction over the Company or any Subsidiary (assuming
compliance with all applicable federal and state securities laws);
(ix) To such counsel's knowledge, except as described in the
Prospectus, there are no holders of Common Stock or other securities
of the Company, or securities that are convertible or exchangeable
into Common Stock or other securities of the Company, that have rights
to the registration of such securities
(x) The Common Stock (including the Shares) has been
designated for inclusion as a National Market security on The Nasdaq
Stock Market and is registered under the Exchange Act;
24
(xi) Neither the Company nor any Subsidiary is, nor with the
giving of notice or passage of time or both would be, in violation of
its respective Articles of Incorporation or By-laws or, to such
counsel's knowledge, in default in any material respect in the
performance of any agreement, lease, franchise, license, permit,
mortgage, deed of trust, evidence of indebtedness or other instrument,
or any other document that is filed as an exhibit to or incorporated
by reference in the Registration Statement, to which the Company or
any Subsidiary is subject or bound;
(xii) Neither the Company nor any Subsidiary is an "investment
company", an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company", as such terms are defined
in the Investment Company Act of 1940, as amended, and, upon its
receipt of any proceeds from the sale of the Shares, the Company will
not become or be deemed to be an "investment company" thereunder;
(xiii) The description or incorporation by reference in the
Registration Statement and the Prospectus of legal matters, statutes,
documents, regulations, legal and governmental proceedings, and
contracts and other legal documents described or incorporated by
reference therein fairly and correctly present, in all material
respects, the information required to be included therein by the Act
and fairly summarize the matters referred to therein; and
(xiv) All offers and sales by the Company of its capital stock
before the date hereof were at all relevant times duly registered
under or exempt from the registration requirements of the Act, and
were duly registered under or the subject of an available exemption
from the registration requirements of any applicable Blue Sky Laws.
In rendering such opinion, counsel for the Company may rely, to the extent
counsel deems such reliance proper, as to matters of fact upon certificates of
officers of the Company and of governmental officials, and copies of all such
certificates shall be furnished to the Representatives and for the Underwriters
on or before each Closing Date. Such opinion may incorporate reasonable
exclusions and qualifications.
(e) The Representatives shall have received an opinion from of Xxxxx,
Johnson, Robinson, Xxxx & Ragonetti, P.C., counsel for the Selling
Stockholder, dated the First Closing Date or the Second Closing
(i) Each of this Agreement and the Custody Agreement has been
duly authorized, executed and delivered by or on behalf of the Selling
Stockholder and such agreement constitutes the valid and binding
agreement of the Selling Stockholder, enforceable in accordance with
its respective terms, except that rights to indemnity or contribution
thereunder may be limited by applicable law and except as
enforceability of such agreement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws generally
affecting the
25
rights of creditors and by equitable principles limiting the right to
specific performance or other equitable relief;
(ii) The execution and delivery of this Agreement and the
Custody Agreement and the consummation of the transactions herein and
therein contemplated will not, if applicable, result in the violation
of any provisions of the Articles of Incorporation, By-laws or other
governing documents of the Selling Stockholder, or constitute a
breach, or to such counsel's knowledge, be in contravention, of any
provision of any agreement, franchise, license, indenture, mortgage,
deed of trust or other instrument to which the Selling Stockholder is
a party or by which the Selling Stockholder or the Selling
Stockholder's property may be bound or affected, or any statute, rule
or regulation applicable to the Selling Stockholder, or to such
counsel's knowledge, violate any order or decree of any court,
regulatory or governmental body, administrative body or
instrumentality of the United States or other jurisdiction having
jurisdiction over the Selling Stockholder or any of the Selling
Stockholder's property;
(iii) The Selling Stockholder has full legal right, power and
authority, and has secured any consent, approval, authorization and
order required to enter into and perform this Agreement and the
Custody Agreement and to sell, assign, transfer and deliver title to
the Shares to be sold by the Selling Stockholder as provided herein;
and upon delivery to the Underwriters or upon the order of the
Representatives against payment of the agreed consideration therefor
in accordance with the provisions of this Agreement, the Underwriters
will acquire good and marketable title to the Shares to be sold
hereunder by the Selling Stockholder, free and clear of all voting
trust arrangements, liens, encumbrances, security interests, equities,
claims and community or marital property rights; and
(iv) To such counsel's knowledge, the information concerning
the Selling Stockholders contained in the Prospectus under the caption
"Principal and Selling Stockholders" complies in all material respects
with the Act.
In rendering such opinion, counsel for the Selling Stockholder may rely, to
the extent counsel deems such reliance proper, as to matters of fact upon
certificates of the Selling Stockholder, and copies of all such certificates
shall be furnished to the Representatives and counsel for the Underwriters on or
before each Closing Date. Such opinion may incorporate reasonable exclusions
and qualifications.
(f) The Representatives shall have received an opinion of Xxxxxx,
Xxxx & Xxxxxxxx LLP, counsel for the Underwriters, dated the First Closing
Date or the Second Closing Date, as the case may be, with respect to the
issuance and sale of the Shares by the Company, the Registration Statement
and other related matters as the Representatives may require, and the
Company shall have furnished to such counsel such documents and shall have
exhibited to them such papers and records as they request for the purpose
of enabling them to pass upon such matters.
26
(g) The Representatives shall have received on each Closing Date, a
certificate of Xxxx X. Xxxxxx, Chief Executive Officer, and Xxxxxxx X.
Xxxxx, Vice President, Finance and Administration, of the Company, to the
effect that:
(i) The representations and warranties of the Company set
forth in section 2 hereof are true and correct as of the date of this
Agreement and as of the date of such certificate, and the Company has
complied with all the agreements and satisfied all the conditions to
be performed or satisfied by it at or prior to the date of such
certificate;
(ii) The Commission has not issued an order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus or
any amendment or supplement thereto; no stop order suspending the
effectiveness of the Registration Statement has been issued; and to
the knowledge of the respective signatories, no proceedings for that
purpose have been initiated or are pending or contemplated under the
Act or under the Blue Sky Laws of any jurisdiction;
(iii) Each of the respective signatories has carefully examined
the Registration Statement and the Prospectus, and any amendment or
supplement thereto, including any documents filed under the Exchange
Act and deemed to be incorporated by reference in the Registration
Statement, and such documents contain all statements required to be
stated therein, and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and since
the date on which the Registration Statement was initially filed, no
event has occurred that was required to be set forth in an amended or
supplemented prospectus or in an amendment to the Registration
Statement that has not been so set forth; and
(iv) Since the date on which the Registration Statement was
initially filed with the Commission, there shall not have occurred any
change or development involving, or which could be expected to
involve, a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, except as disclosed
in the Prospectus and the Registration Statement as heretofore amended
or (but only if the Representatives expressly consent thereto in
writing) as disclosed in an amendment or supplement thereto filed with
the Commission and delivered to the Representatives after the
execution of this Agreement; since such date and except as so
disclosed or in the ordinary course of business, the Company has not
incurred any liability or obligation, direct or indirect, or entered
into any transaction which is material to the Company; since such date
and except as so disclosed, there has not been any change in the
outstanding capital stock of the Company, or any change that is
material to the Company in the short-term debt or long-term debt of
the Company; since such date and except as so disclosed or as
contemplated in this Agreement, the Company has not acquired any of
the Common Stock or other capital stock of the Company nor has the
Company declared or paid any dividend, or made any other
27
distribution, upon its outstanding Common Stock payable to
stockholders of record on a date prior to such Closing Date; since
such date and except as so disclosed, the Company has not incurred any
material contingent obligations, and no material litigation is pending
or threatened against the Company; and, since such date and except as
so disclosed, the Company has not sustained any material loss or
interference from any strike, fire, flood, windstorm, accident or
other calamity (whether or not insured) or from any court or
governmental action, order or decree.
The delivery of the certificate provided for in this subsection (g) shall
be and constitute a representation and warranty of the Company as to the facts
required in the immediately foregoing clauses (i), (ii), (iii) and (iv) to be
set forth in said certificate.
(h) The Representatives shall have received a certificate from the
Selling Stockholder, dated the First Closing Date or the Second Closing
Date, as the case may be, to the effect that: (i) the representations and
warranties of the Selling Stockholder in Section 3 of this Agreement are
true and correct as of the date of this Agreement and as of the date of
such certificate, as if again made on and as of such Closing Date, and the
Selling Stockholder has complied with all of the agreements and satisfied
all of the conditions to be performed or satisfied by the Selling
Stockholder at or prior to such Closing Date; and (ii) the Selling
Stockholder has no reason to believe that the Registration Statement or any
amendment thereto, including any documents filed under the Exchange Act and
deemed to be incorporated by reference in the Registration Statement, at
the time it was declared effective by the Commission contained any untrue
statement of a material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus, as amended or supplemented, including
any documents filed under the Exchange Act and deemed to be incorporated by
reference in the Registration Statement, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(i) At the time this Agreement is executed and also on each Closing
Date, there shall be delivered to the Representatives a letter addressed to
the Representatives, as the representatives of the Underwriters, from each
of Ernst & Young LLP, Xxxxxxx Xxxxx Xxxxxxxx & Xxxx, P.A., and Xxxxxxxxx
Xxxxx & Co., the Company's independent accountants, the first letters to be
dated the date of this Agreement, the second letters to be dated the First
Closing Date and the third letters (if applicable) to be dated the Second
Closing Date, which shall be in form and substance satisfactory to the
Representatives and shall contain information as of a date within five days
of the date of such letter. There shall not have been any change or
decrease set forth in any of the letters referred to in this subsection (i)
which makes it impracticable or inadvisable in the judgment of the
Representatives to proceed with the public offering or purchase of the
Shares as contemplated hereby.
28
(j) The Shares shall have been qualified or registered for sale under
the Blue Sky Laws of such jurisdictions as shall have been specified by the
Representatives, the underwriting terms and arrangements for the offering
shall have been cleared by the NASD, and the Common Stock (including the
Shares) shall have been designated for inclusion as a Nasdaq National
Market security on the Nasdaq Stock Market and shall have been registered
under the Exchange Act.
(k) Such further certificates and documents as the Representatives
may reasonably request (including certificates of officers of the Company).
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to the
Representatives and to Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel for the
Underwriters. The Company and the Selling Stockholder shall furnish the
Representatives with such manually signed or conformed copies of such opinions,
certificates, letters and documents as the Representatives may reasonably
request.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at either Closing Date is not so satisfied, this Agreement at the
election of the Representatives will terminate upon notification to the Company
and the Selling Stockholder, or any one of them, without liability on the part
of any Underwriter, including the Representatives, the Company or the Selling
Stockholder except for the provisions of section 7(n) hereof, the expenses to be
paid by the Company and the Selling Stockholder pursuant to section 9 hereof and
except to the extent provided in section 12 hereof.
SECTION 11. MAINTAIN EFFECTIVENESS OF REGISTRATION STATEMENT. The Company
------------------------- ----------------------
will use its best efforts and the Selling Stockholder will use his best efforts
to prevent the issuance of any stop order suspending the effectiveness of the
Registration Statement, and, if such stop order is issued, to obtain as soon as
possible the lifting thereof.
SECTION 12. INDEMNIFICATION.
---------------
(a) The Company and the Selling Stockholder, jointly and severally,
subject to the last paragraph of this Section 12, agree to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the Act or the Exchange Act, from and
against any losses, claims, damages, expenses, liabilities or actions in
respect thereof ("Claims"), joint or several, to which such Underwriter or
each such controlling person may become subject under the Act, the Exchange
Act, Blue Sky Laws or other federal or state statutory laws or regulations,
at common law or otherwise (including payments made in settlement of any
litigation), insofar as such Claims arise out of or are based upon any
breach of any representation, warranty or covenant made by the Company in
this Agreement, or any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or in
any application filed under any Blue Sky Law or other document executed by
the Company for that purpose or based upon written information furnished by
the Company and filed in any state or other jurisdiction to qualify any or
all of the Shares under the
29
securities laws thereof (any such document, application or information
being hereinafter called a "Blue Sky Application") or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading. The Company and the Selling Stockholder, jointly
and severally, subject to the last paragraph of this Section 12, agree to
reimburse each Underwriter and each such controlling person for any legal
fees or other expenses incurred by such Underwriter or any such controlling
person in connection with investigating or defending any such Claim;
provided, however, that the Company and the Selling Stockholder will not be
liable in any such case to the extent that: (i) any such Claim arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement, any
Preliminary Prospectus, the Prospectus or supplement thereto or in any Blue
Sky Application in reliance upon and in conformity with the written
information furnished to the Company pursuant to section 5 of this
Agreement or (ii) such statement or omission was contained or made in any
Preliminary Prospectus and corrected in the Prospectus and (1) any such
Claim suffered or incurred by any Underwriter (or any person who controls
any Underwriter) resulted from an action, claim or suit by any person who
purchased Shares which are the subject thereof from such Underwriter in the
offering, and (2) such Underwriter failed to deliver or provide a copy of
the Prospectus to such person at or prior to the confirmation of the sale
of such Shares, unless such failure was due to failure by the Company to
provide copies of the Prospectus to the Underwriters as required by this
Agreement. The indemnification obligations of the Company and the Selling
Stockholder as provided above are in addition to and in no way limit any
liabilities the Company and the Selling Stockholder may otherwise have.
(b) The Selling Stockholder, agrees to indemnify and hold harmless
each Underwriter and each controlling person from and against any Claims to
which such Underwriter or each such controlling person may become subject
under the Act, the Exchange Act, Blue Sky laws or other federal or state
statutory laws or regulations, at common law or otherwise (including
payments made in settlement of any litigation), insofar as such Claims
arise out of or are based upon any breach of any representations, warranty
or covenant made by the Selling Stockholder in this Agreement.
(c) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors and each of its officers
who signs the Registration Statement, and each person, if any, who controls
the Company within the meaning of the Act or the Exchange Act and the
Selling Stockholder against any Claim to which the Company, or any such
director, officer, controlling person or Selling Stockholder may become
subject under the Act, the Exchange Act, Blue Sky Laws or other federal or
state statutory laws or regulations, at common law or otherwise (including
payments made in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter and Xxxxxx Gull),
insofar as such Claim arises out of or is based upon any untrue or alleged
untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or in any Blue Sky Application, or arises out of or
30
is based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or in any Blue Sky
Application, or arises out of or is based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or in any Blue Sky Application, in
reliance solely upon and in conformity with the written information
furnished by the Representatives to the Company pursuant to section 5 of
this Agreement. Each Underwriter will severally reimburse any legal fees or
other expenses incurred by the Company, or any such director, officer,
controlling person or Selling Stockholder in connection with investigating
or defending any such Claim, and from any and all Claims solely resulting
from failure of an Underwriter to deliver a Prospectus, if the person
asserting such Claim purchased Shares from such Underwriter and a copy of
the Prospectus (as then amended if the Company shall have furnished any
amendments thereto) was not sent or given by or on behalf of such
Underwriter to such person, at or prior to the written confirmation of the
sale of the Shares to such person, and if the Prospectus (as so amended)
would have cured the defect giving rise to such Claim. The indemnification
obligations of each Underwriter as provided above are in addition to any
liabilities any such Underwriter may otherwise have. Notwithstanding the
provisions of this section, no Underwriter shall be required to indemnify
or reimburse the Company, or any officer, director, controlling person or
the Selling Stockholder in an aggregate amount in excess of the total price
at which the Shares purchased by any such Underwriter hereunder were
offered to the public, less the amount of any damages such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(d) The Selling Stockholder agrees to indemnify and hold harmless the
Company, each of its directors and each of its officers who signs the
Registration Statement, and each person, if any, controlling the Company
within the meaning of the Act or the Exchange Act to the same extent as the
foregoing indemnity from the Company to each Underwriter set forth in
subsection (a) of this section. In case any Claim shall be brought or
asserted against the Company, its directors, such officers or any such
controlling person, in respect of which indemnity may be sought against the
Selling Stockholder, the Selling Stockholder shall have the rights and
duties given to the Company, and the Company, such directors or officers
and any such controlling person shall have the rights and duties given to
the Underwriters by subsection (a) of this section.
(e) Promptly after receipt by an indemnified party under this section
of notice of the commencement of any action in respect of a Claim, such
indemnified party will, if a Claim in respect thereof is to be made against
an indemnifying party under this section, notify the indemnifying party in
writing of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve an indemnifying party from any
liability it may have to any indemnified party under this section or
otherwise, except to the extent that the failure to so notify the
indemnifying party causes such party prejudice. In case any such action is
brought against any indemnified party, and such indemnified
31
party notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent
that he, she or it may wish, jointly with all other indemnifying parties,
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and any
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to the indemnified
party and/or other indemnified parties which are different from or
additional to those available to any indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assume
such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties.
(f) Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election to assume the
defense of such action and upon approval by the indemnified party of
counsel selected by the indemnifying party, the indemnifying party will not
be liable to such indemnified party under this section for any legal fees
or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, unless:
(i) the indemnified party shall have employed separate counsel
in connection with the assumption of legal defenses in accordance with
the proviso to the last sentence of subsection (e) of this section (it
being understood, however, that the indemnifying party shall not be
liable for the legal fees and expenses of more than one separate
counsel, approved by Xxxxxx Gull, if one or more of the Underwriters
or their controlling persons are the indemnified parties);
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the indemnified
party's notice to the indemnifying party of commencement of the
action; or
(iii) the indemnifying party has authorized the employment of
counsel at the expense of the indemnifying party.
(g) If the indemnification provided for in this section is unavailable
to an indemnified party under subsection (a), (b), (c) or (d) hereof in
respect of any Claim referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall, subject to the
limitations hereinafter set forth, contribute to the amount paid or payable
by such indemnified party as a result of such Claim:
(i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, the Selling Stockholder and
the Underwriters from the offering of the Shares; or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative
32
benefits referred to in clause (i) above, but also the relative fault
of the Company, the Selling Stockholder and the Underwriters in
connection with the statements or omissions which resulted in such
Claim, as well as any other relevant equitable considerations.
The relative benefits received by each of the Company, the Selling
Stockholder and the Underwriters shall be deemed to be in such proportion so
that the Underwriters are responsible for that portion represented by the
percentage that the amount of the underwriting discounts and commissions per
share appearing on the cover page of the Prospectus bears to the public offering
price per share appearing thereon, and the Company, and the Selling Stockholder,
are responsible for the remaining portion. The relative fault of the Company,
the Selling Stockholder and the Underwriters shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Stockholder, or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the Claims referred to above shall be
deemed to include, subject to the limitations set forth in subsections (e) and
(f) of this section, any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim.
(h) The Company, the Selling Stockholder and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
section were determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method or allocation which does not take into account the equitable
considerations referred to in subsection (f) of this section.
Notwithstanding the other provisions of this section, no Underwriter shall
be required to contribute any amount that is greater than the amount by
which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this section are
several in proportion to their respective underwriting commitments and not
joint.
(i) Notwithstanding any provision of this section 12 to the contrary,
the liability of the Selling Stockholder arising under this section 12
shall not exceed the purchase price received by the Selling Stockholder
from the Underwriters for the Shares sold by the Selling Stockholder.
SECTION 13. DEFAULT OF UNDERWRITERS. It shall be a condition to the
-----------------------
obligations of each Underwriter to purchase the Shares in the manner as
described herein, that, except as hereinafter provided in this section, each of
the Underwriters shall purchase and pay for all the Shares agreed to be
purchased by such Underwriter hereunder upon tender to the Representatives
33
of all such Shares in accordance with the terms hereof. If any Underwriter or
Underwriters default in their obligations to purchase Shares hereunder on either
the First Closing Date or the Second Closing Date and the aggregate number of
Shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed ten percent (10%) of the total number of Shares which
the Underwriters are obligated to purchase on such Closing Date, the
Representatives may make arrangements for the purchase of such Shares by other
persons, including any of the Underwriters, but if no such arrangements are made
by such Closing Date the nondefaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Shares which such defaulting Underwriters agreed but failed to purchase on
such Closing Date. If any Underwriter or Underwriters so default and the
aggregate number of Shares with respect to which such default or defaults occur
is greater than ten percent (10%) of the total number of Shares which the
Underwriters are obligated to purchase on such Closing Date, and arrangements
satisfactory to the Representatives for the purchase of such Shares by other
persons are not made within thirty-six hours after such default, this Agreement
will terminate without liability on the part of any nondefaulting Underwriter,
the Company, and the Selling Stockholder except to the extent provided in
section 12 hereof.
In the event that Shares to which a default relates are to be purchased by
the nondefaulting Underwriters or by another party or parties, the
Representatives shall have the right to postpone the First Closing Date or the
Second Closing Date, as the case may be, for not more than seven business days
in order that the necessary changes in the Registration Statement, Prospectus
and any other documents, as well as any other arrangements, may be effected. As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 14. EFFECTIVE DATE. This Agreement shall become effective upon
--------------
the execution and delivery of this Agreement by the parties hereto. Such
execution and delivery shall include an executed copy of this Agreement sent by
telecopier, facsimile transmission or other means of transmitting written
documents.
SECTION 15. TERMINATION. Without limiting the right to terminate this
-----------
Agreement pursuant to any other provision hereof, this Agreement may be
terminated by the Representatives prior to or on the First Closing Date and the
over-allotment option from the Company referred to in section 6 hereof, if
exercised, may be cancelled by the Representatives at any time prior to or on
the Second Closing Date, if in the judgment of the Representatives, payment for
and delivery of the Shares is rendered impracticable or inadvisable because:
(a) additional governmental restrictions, not in force and effect on
the date hereof, shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or the American Stock Exchange,
or trading in securities generally shall have been suspended or materially
limited on either such exchange or on The Nasdaq Stock Market or a general
banking moratorium shall have been established by either federal or state
authorities in New York, Colorado, Florida or Wisconsin;
34
(b) any event shall have occurred or shall exist which makes untrue or
incorrect in any material respect any statement or information contained in
the Registration Statement or which is not reflected in the Registration
Statement but should be reflected therein to make the statements or
information contained therein not misleading in any material respect; or
(c) an outbreak or escalation of hostilities or other national or
international calamity or any substantial change in political, financial or
economic conditions shall have occurred or shall have accelerated to such
extent, in the judgment of the Representatives, as to have a material
adverse effect on the financial markets of the United States, or to make it
impracticable or inadvisable to proceed with completion of the sale of and
payment for the Shares as provided in this Agreement.
Any termination pursuant to this Section shall be without liability on the
part of any Underwriter to the Company or the Selling Stockholder, or on the
part of the Company or the Selling Stockholder to any Underwriter, except for
expenses to be paid by the Company and the Selling Stockholder pursuant to
section 9 hereof or reimbursed by the Company pursuant to section 7(n) hereof
and except as to indemnification to the extent provided in section 12 hereof.
SECTION 16. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
---------------------------------------------------
respective indemnities, agreements, representations, warranties, covenants and
other statements of the Company, of its officers or directors, of the Selling
Stockholder, and of the several Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter, Selling Stockholder or
the Company or any of its or their partners, officers, directors or any
controlling person, as the case may be, and will survive delivery of and payment
for the Shares sold hereunder.
SECTION 17. NOTICES. All communications hereunder will be in writing and,
-------
if sent to the Representatives, will be mailed, delivered, telecopied (with
receipt confirmed) or telegraphed and confirmed to Xxxxxx Gull Xxxxxxx &
XxXxxxxx Inc. at 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, Attention:
Xxxxx Xxxxxxxx, Chief Executive Officer, with a copy to Xxxxxx, Xxxx & Xxxxxxxx,
LLP, 0000 Xxxxxxxxxx Xx., Xxxxx 0000, Xxxxxx, XX 00000, Attention: Xxxxxxx X.
Xxxxx, Esq. and if sent to the Company, will be mailed, delivered, telecopied
(with receipt confirmed) or telegraphed and confirmed to the Company at 0000
Xxxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000, Attention: Xxxx X. Xxxxxx,
Chairman, President and CEO, with a copy to Xxxxx, Johnson, Robinson, Xxxx &
Xxxxxxxxx, P.C., Attention: Xxxxxxx X. Xxxxxx, Esq. and, if sent to the Selling
Stockholder, will be mailed, delivered, telecopied (with receipt confirmed) or
telegraphed and confirmed, to Rockmont Capital Limited, 000 Xxxxxxxx, Xxxxx 000,
Xxxxxx, XX 00000, with copies to Xxxxx, Johnson, Robinson, Xxxx & Ragonetti,
P.C., Attention: Xxxxxxx X. Xxxxxx, Esq.
SECTION 18. SUCCESSORS. This Agreement will inure to the benefit of and
----------
be binding upon the parties hereto and their respective successors, personal
representatives and assigns, and to the benefit of the officers and directors
and controlling persons referred to in section 12 hereof and no other person
will have any right or obligation hereunder. The term "successors" shall not
35
include any purchaser of the Shares as such from any of the Underwriters merely
by reason of such purchase.
SECTION 19. PARTIAL UNENFORCEABILITY. If any section, paragraph, clause
------------------------
or provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph clause or provision hereof.
SECTION 20. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be
----------------------------
governed by and construed in accordance with the internal laws of the State of
New York without reference to conflict of law principles thereunder. This
Agreement may be signed in various counterparts which together shall constitute
one and the same instrument, and shall be effective when at least one
counterpart hereof shall have been executed by or on behalf of each party
hereto.
36
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, the Selling Stockholder and the
several Underwriters, including the Representatives, all in accordance with its
terms.
Very truly yours,
KOALA CORPORATION
By: ________________________________
Its: _______________________________
THE SELLING STOCKHOLDER:
ROCKMONT CAPITAL LIMITED
By:_______________________________
Name:__________________
Title:_________________
37
The foregoing Underwriting Agreement
is hereby confirmed
and accepted as of the date
first above written.
XXXXXX GULL XXXXXXX & XxXXXXXX INC.
XXXXXX XXXXXXX INCORPORATED
XXXXX-XXXXXX CAPITAL GROUP, INC.
By: Xxxxxx Gull Xxxxxxx & XxXxxxxx Inc.
Acting as Representatives of the several
Underwriters (including themselves) identified
in Schedule II annexed hereto.
By:________________________________
Authorized Representative
38
KOALA CORPORATION
Schedule I
----------
Number of Number of
Firm Shares Optional Shares
---------------------- -------------------------
The Company 320,000 180,000
Rockmont Capital Limited 880,000 0
--------- -------
Total 1,200,000 180,000
39
KOALA CORPORATION
Schedule II
-----------
Number of Firm Shares
Name of Underwriter
------------------- to be Purchased
------------------------------------
Xxxxxx Gull Xxxxxxx & XxXxxxxx Inc.
Xxxxxx Xxxxxxx Incorporated
Xxxxx-Xxxxxx Capital Group, Inc. ____________
Total 1,200,000
40
